P.S. Docket No. AO-33
August 31, 1993
In the Matter of the Petition by )
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RUDY TOSENBERGER )
3858 Ranfield Road )
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at )
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Kent, OH 44240-6761 ) P.S. Docket No. AO-33
APPEARANCE FOR PETITIONER: Ralph L. Oates, Esq.
217 East Main Street
Kent, OH 44240-2526
APPEARANCE FOR RESPONDENT: Andrew C. Jagusiak, Esq.
Legal Liaison Branch
Postal Inspection Service
475 L'Enfant Plaza West, S.W.
Washington, DC 20260-2181
INITIAL DECISION
By letter dated January 6, 1992, the Postal Inspection Service initiated this matter by demanding from Petitioner the payment of $10,320.00, "... in addition to any articles or funds recovered from you through payroll deductions," as a result of "your shortage while employed by the United States Postal Service." The demand was based on an allegation that Petitioner had purchased misprinted stamps obtained in the course of his employment at the Kent, Ohio, Post Office and had resold the stamps at a profit. The letter stated that unless payment was received, steps would be taken to have the amount of the debt set off against Petitioner's "retirement fund or annuity." Petitioner requested reconsideration of the demand on the grounds that although he and several others were suspended for alleged improper purchase of misprinted stamps, only Petitioner was not reinstated to his position with the Postal Service and that the failure to reinstate him had been influenced by the fact that he was president of the local union.
After reconsideration, in a February 27, 1992, letter the Inspection Service reiterated its demand for the payment of $10,320.00 on the grounds that Petitioner had "unjustly enriched" himself as a result of Postal Service employment. The letter also informed Petitioner of his right to a de novo evidentiary hearing, apparently to be held by the Inspection Service, if he wished one. By letter dated March 9, 1992, Petitioner requested such a hearing. The record does not reveal whether the hearing was held, but in a letter dated November 16, 1992, the Inspection Service again demanded the payment of $10,320.00 on the grounds of unjust enrichment, and informed Petitioner of his right to request a written or oral hearing by filing such a request with the Judicial Officer. On December 17, 1992, Petitioner filed a petition requesting an oral hearing.
A hearing was held in Akron, Ohio. Petitioner testified on his own behalf and also presented the testimony of Jessie Pojman and Debbie Stewart.
Respondent presented the testimony of Postal Inspectors Ralph Tyler and Charles P. Jeronis. The following findings of fact and conclusions of law are based on the testimony at the hearing and on the exhibits which were admitted into evidence during the course of the hearing.
FINDINGS OF FACT
1. In May 1990, Petitioner was employed as a replacement window clerk at the Kent, Ohio, post office and had been a Postal Service [and Post Office Department] employee in various capacities within a post office (carrier clerk, clerk, and window clerk) for approximately twenty five years. During that period, he had served as president of a local union for 15 or 20 years. (Transcript pages (Tr.) 108-112).
2. On May 24, 1990, a customer at the post office notified one of the window clerks on duty (not Petitioner) that she had just purchased what appeared to be a booklet of misprinted twenty-five cent "Love" stamps from a vending machine in the post office. The defect reported was the absence of a red heart, which should have appeared on each stamp. Immediately thereafter, Petitioner, who had custody of the keys to the vending machine because of the impending vacation of the employee normally responsible for the machine, opened the machine and, with another employee, went through the stamps in the machine and removed an additional quantity of misprinted booklets. (Tr. 28, 43, 112).
3. Petitioner purchased a quantity of the misprinted booklets at face value ($5.00) for his own benefit and also offered booklets for sale to the other employees present at the post office. A number of employees purchased booklets at face value. In addition, no later than June 1, 1990, Petitioner sold a quantity of eleven booklets, apparently from those which he had purchased for himself, to another employee -- one booklet at face value and ten booklets at $30.00 per booklet, for a total of $305.00. (Respondent's Answer to the Petition, Tab 11, Exhibit 10 (Ans., Tab 11/Exh. 10); Tr. 124). Petitioner's immediate supervisor and the postmaster were aware of the existence of the misprinted booklets and apparently interposed no objections to the transactions which were taking place -- at least to those transactions which took place at the time the booklets were first discovered. The record is silent as to whether the postmaster specifically approved or was aware of the sale of the stamps at prices in excess of face value.
4. In early June 1990, Petitioner sold 20 booklets of the stamps which he had purchased to a stamp dealer in New Jersey. He received payment in the amount of $5400.00 from the dealer. In late June 1990, Petitioner sent an additional 16 booklets of stamps to the same dealer. In late June or early July 1990, Petitioner also sold one booklet of misprinted stamps to a dealer in Florida and received a check for $350.00, dated July 3, 1990, as payment (Tr. 46, 122; Ans. Tab 11/Exh. 11).
5. In early June the Postal Inspection Service had been alerted to the existence of the misprinted stamps and to the fact that they were being offered for sale, apparently by Postal Service employees. On July 10, 1990, an Inspection Service employee posing as a customer brought two misprinted stamp booklets into the Kent Post Office and asked Petitioner what she should do with them. Petitioner took the booklets from her and gave her two correctly printed booklets in return, stating that he had to turn in the misprinted booklets. The record does not indicate what happened to the two misprinted booklets, but there is no evidence they were sold.
6. On July 17, 1990, the Kent postmaster addressed a memorandum to the window clerks stating:
"IF ANY DEFECTIVE, MISPRINTED, MISPUNCHED STAMPS COME INTO YOUR POSSESSION, THROUGH ISSUANCE OR CUSTOMER RETURN, YOU ARE TO TO [sic] TURN THEM IN TO THE MAIN STOCK. YOU ARE NOT PERMITTED TO BUY OR SELL STAMPS YOU KNOW TO BE IN THIS CATEGORY...."
Each of the window clerks, including Petitioner, acknowledged receiving the memorandum by signing and dating it at the bottom. Petitioner's signature bears the date of July 18, 1990. (Ans. Tab 11/Exh. 6).
7. Posing as the office manager of the New Jersey stamp dealer, an Inspection Service employee contacted Petitioner by telephone on July 24, 1990, informed him that a buyer had been found for the second group of stamp booklets, confirmed his address, and stated that a check for the sale proceeds, less the dealer's commission, would be sent out that day. The Inspection Service purchased a cashier's check, dated July 24, 1990, made out to Petitioner in the amount of $4320.00 and mailed it to him. Petitioner negotiated the check and deposited the proceeds in his account. (Tr. 39-41, 122; Ans. Tab 11, para. 15, 16).
8. As a result of these events, at least four clerks, including Petitioner, and one supervisor at the Kent Post Office were removed from the Postal Service1/ and received letters demanding the repayment of profits made from the sale of the stamps (Tr. 102). The other three clerks were eventually rehired or restored to their positions (Tr. 98, 105, 108). Petitioner's removal, however, was affirmed by an arbitrator at least in part because he had been a union official and was "held to a higher standard of conduct" with respect to knowing how to handle novel situations (Tr. 121).
9. Section 660 of the U.S. Postal Service Employee and Labor Relations Manual (ELM) contains the following provisions relevant to this matter:
"661.3 Standards of Conduct
Employees must avoid any action, whether or not specifically prohibited by [the Code of Ethics for Government Service],2/ which might result in or create the appearance of:
a. Using Postal Service office for private gain.
* * * * *
f. Affecting adversely the confidence of the public in the integrity of the Postal Service." (Hearing Exhibit 13).
10. Postal Service Handbook F-1, Post Office Accounting Procedures, contains the following provisions relevant to this matter:
"426.5 Defective Stock
.51 Defective stamps and stamped paper are not salable and remain the property of the Postal Service. No employee or contractor may purchase, sell, or transfer defective stamps or stamped paper from an official supply.
.52 Any postal employee or contractor discovering defective stamps or stamped paper must immediately return it to the Main Stock.
.53 Defective stock includes obvious printing and production errors such as:
a. Missing color;
b. Upside-down printing;
c. Bad color registration;
d. No perforations;
e. Perforated stamp design; and
f. Single color border on airmail postal cards."
(Hearing Exhibit 12)
11. Both the ELM and Handbook F-1 were available to Petitioner at the Kent Post Office. Handbook F-1 is used extensively by Postal Service window clerks. (Tr. 19, 82-84).
12. The amount sought from Petitioner, $10,320.00, was calculated as follows:
10 booklets at $30.00 each $ 300.00
20 booklets at $300.00 each (less 10% commission) 5,400.00
1 booklet at $350.00 350.00
16 booklets at $300.00 each (less 10% commission) 4,320.00
Subtotal $10,370.00
Less purchase price of 10 booklets (50.00)
Net $10,320.00
Respondent has stipulated that Petitioner paid for all 47 of the booklets which he resold rather than only the ten books for which he received a credit. Therefore, Petitioner is entitled to an additional credit of $185.00 [37 x $5.00], thereby reducing his total potential indebtedness to $10,135.00.
CONCLUSIONS OF LAW
1. The language of paragraph 426.51 of Handbook F-1 [Finding 10] unambiguously prohibited the actions which Petitioner took in this matter - i.e., the purchase and resale of defective stamps from an official supply. The unchallenged testimony of Respondent's witnesses was that Handbook F-1 was both readily available at the Kent Post Office and was a volume commonly used by window clerks, a position held by Petitioner. While Petitioner cannot reasonably be expected to know the contents of the handbook verbatim, he may reasonably be charged with a general awareness of the topics covered by the handbook, particularly in view of his 26 years of experience in the Postal Service, all or much of which was spent in various clerical positions within post offices. Petitioner could reasonably be expected to recognize an unusual situation such as the one which presented itself to him in this matter and consult the handbook for guidance.
2. Petitioner may also be properly charged with knowledge, at least in general terms, of the Standards of Conduct for Postal Service employees contained in the ELM,3/ including the prohibition against taking actions which might "result in or create the appearance of using Postal Service office for private gain." The record in this matter indicates that Petitioner in fact used his position as a Postal Service employee with free access to the contents of the stamp vending machine to achieve a benefit which would not have been available to him but for his Postal Service position.
3. While it appears that Petitioner's supervisor and the postmaster were aware of the existence of the misprinted stamps, the record does not support a finding that Petitioner specifically asked either person whether selling the misprinted stamps for his own profit was proper. Petitioner did not claim during his interview with Postal Inspectors that he had specifically discussed with either person the legitimacy of selling the stamps for his personal gain (Tr. 130).
4. Petitioner testified that he believed he had been singled out for harsh treatment because of his position as a union president. However, the record does not support Petitioner's contention. The only reference to Petitioner's union position cited by him was a reference apparently made by an arbitrator in ruling against Petitioner's challenge to his removal from the Postal Service. There was no evidence offered in this matter which would support a finding that the decision to pursue an assessment against Petitioner was motivated by his position as union president.
5. Under these circumstances, it is appropriate to recover from Petitioner the gain which he achieved through violations of the Postal Service regulations. In this instance, although Petitioner profited from the sale of misprinted stamps, the Postal Service suffered no direct financial harm because of the transactions. Nonetheless, Petitioner may properly be assessed the amount of his gain. See e.g. Restatement of Restitution § 1, comment e and § 160, comment d; United States v. Snepp, 444 U.S. 507, 100 S. Ct. 763, reh. den. 445 U.S. 972, 100 S. Ct. 1668 (1980). The amount to be assessed, however, is to represent only Petitioner's net gain on the transactions. Accordingly, Petitioner is to have credited against the $10,135.00 otherwise due [Finding 12], the amount of any income or other taxes paid by Petitioner by virtue of his profit on the sale of the stamps. Petitioner offered unchallenged testimony that he paid such taxes (Tr. 126), but the record is inadequate to determine the amount of the payments. To the extent that Petitioner can demonstrate that he paid such taxes, the amount of those payments is to be credited against the amount otherwise due.
Accordingly, to the extent set forth above, I conclude that Petitioner is liable to the Postal Service. Appropriate offset procedures may be used to recover the debt.
David I. Brochstein
Administrative Judge
1/ Removal was apparently the penalty assessed against those who had profited from the sale of the misprinted stamps.
3/ The provisions of Handbook F-1 and the ELM are part of the system of "regulations" of the Postal Service. 39 C.F.R. § 211.2(a).